Typically, medical device systems will emerge from the strategic technology planning and technology assessment processes as required and budgeted needs. At acquisition time, a needs analysis should be conducted, reaffirming clinical needs and device intended applications. The “request-for-review” documentation from the assessment process or capital budget request and incremental financial analysis from the planning process may provide appropriate justification information, and a capital asset request (CAR) form should be completed [14]. Materials management and clinical engineering personnel should ensure that this item is a candidate for centralized and coordinated acquisition of similar equipment with other hospital departments. Typical hospital prepurchase evaluation guidelines include an analysis of needs and development of a specification list, formation of a vendor list and requesting proposals, analyzing proposals and site planning, evaluating samples, selecting finalists, making the award, delivery and installation, and acceptance testing. Formal request for proposals (RFPs) from potential equipment vendors are required for intended acquisitions whose initial or life-cycle cost exceeds a certain threshold, i.e., $100,000. Finally, the purchase takes place, wherein final equipment negotiations are conducted and purchase documents are prepared, including a purchase order.
Acquisition Process Strategies
The cost-of-ownership concept can be used when considering what factors to include in cost comparisons of competing medical devices. Cost of ownership encompasses all the direct and indirect expenses associated with medical equipment over its lifetime [15]. It expresses the cost factors of medical equipment for both the initial price of the equipment (which typically includes the equipment, its installation, and initial training cost) and over the long term. Long-term costs include ongoing training, equipment service, supplies, connectivity, upgrades, and other costs. Health care organizations are just beginning to account for a full range of cost-of-ownership factors in their technology assessment and acquisition processes, such as acquisition costs, operating costs, and maintenance costs (installation, supplies, downtime, training, spare parts, test equipment and tools, and depreciation). It is estimated that the purchase price represents only 20% of the life-cycle cost of ownership.
When conducting needs analysis, actual utilization information from the organization’s existing same or similar devices can be very helpful. One leading private multihospital system has implemented the following approach to measuring and developing relevant management feedback concerning equipment utilization. It is conducting equipment utilization review for replacement planning, for ongoing account-ability of equipment use, and to provide input before more equipment is purchased. This private system attempts to match product to its intended function and to measure daily (if necessary) the equipment’s actual utilization. The tools they use include knowing their hospital’s entire installed base of certain kinds of equipment, i.e., imaging systems.
Utilization assumptions for each hospital and its clinical procedural mix are made.
Equipment functional requirements to meet the demands of the clinical procedures are also taken into account.
Life-cycle cost analysis is a tool used during technology planning, assessment, or acquisition “either to compare high-cost, alternative means for providing a service or to determine whether a single project or technology has a positive or negative economic value. The strength of the life-cycle cost analysis is that it examines the cash flow impact of an alternative over its entire life, instead of focusing solely on initial capital investments” [15].
“Life-cycle cost analysis facilitates comparisons between projects or technologies with large initial cash outlays and those with level outlays and inflows over time. It is most applicable to complex, high-cost choices among alternative technologies, new service, and different means for providing a given service. Life-cycle cost analysis is particularly useful for decisions that are too complex and ambiguous for experience and subjective judgment alone. It also helps decision makers perceive and include costs that often are hidden or ignored, and that may otherwise invalidate results” [12].
“Perhaps the most powerful life-cycle cost technique is net present value (NPV) analysis, which explicitly accounts for inflation and foregone investment opportunities by expressing future cash flows in present dollars” [12].
Examples where LCC and NPV analysis prove very helpful are in deciding whether to replace/rebuild or buy/lease medical imaging equipment. The kinds of costs captured in life-cycle cost analysis, include decision-making costs, planning agency/certificate of need costs (if applicable), financing, initial capital investment costs including facility changes, life-cycle maintenance and repairs costs, personnel costs, and other (reimbursement consequences, resale, etc.).
One of the best strategies to ensure that a desired technology is truly of value to the hospital is to conduct a careful analysis in preparation for its assimilation into hospital operations. The process of equipment prepurchase evaluation provides information that can be used to screen unacceptable performance by either the vendor or the equipment before it becomes a hospital problem.
Once the vendor has responded to informal requests or formal RFPs, the clinical engineering department should be responsible for evaluating the technical response, while the materials management department should devaluate the financial responses.
In translating clinical needs into a specification list, key features or “must-have”
attributes of the desired device are identified. In practice, clinical engineering and materials management should develop a must-have list and an “extras” list. The extras list contains features that may tip the decision in favor of one vendor, all other factors being
even. These specification lists are sent to the vendor and are effective in a self-elimination process that results in a time savings for the hospital. Once the “must-have”
attributes have been satisfied, the remaining candidate devices are evaluated technically, and the extras are considered. This is accomplished by assigning a weighting factor (i.e., 0 to 5) to denote the relative importance of each of the desired attributes. The relative ability of each device to meet the defined requirements is then rated [15].
One strategy that strengthens the acquisition process is the conditions-of-sale document. This multifaceted document integrates equipment specifications, performance, installation requirements, and follow-up services. The conditions-of-sale document ensures that negotiations are completed before a purchase order is delivered and each participant is in agreement about the product to be delivered. As a document of compliance, the conditions-of-sale document specifies the codes and standards having jurisdiction over that equipment. This may include provisions for future modification of the equipment, compliance with standards under development, compliance with national codes, and provision for software upgrades.
Standard purchase orders that include the conditions of sale for medical equipment are usually used to initiate the order. At the time the order is placed, clinical engineering is notified of the order. In addition to current facility conditions, the management must address installation and approval requirements, responsibilities, and timetable; payment, assignment, and cancellation; software requirements and updates; documentation; clinical and technical training; acceptance testing (hospital facility and vendor); warranty, spare parts, and service; and price protection.
All medical equipment must be inspected and tested before it is placed into service regardless of whether it is purchased, leased, rented, or borrowed by the hospital. In any hospital, clinical engineering should receive immediate notification if a very large device or system is delivered directly into another department (e.g., imaging or cardiology) for installation. Clinical engineering should be required to sign off on all purchase orders for devices after installation and validation of satisfactory operation. Ideally, the warranty period on new equipment should not begin until installation and acceptance testing are completed. It is not uncommon for a hospital to lose several months of free parts and service by the manufacturer when new equipment is, for some reason, not installed immediately after delivery.
Clinical Team Requirements
During the technology assessment and acquisition processes, clinical decision-makers analyze the following criteria concerning proposed technology acquisitions, specifically as they relate to clinical team requirements: ability of staff to assimilate the technology, medical staff satisfaction (short term and long term), impact on staffing (numbers, functions), projected utilization, ongoing related supplies required, effect on delivery of care and outcomes (convenience, safety, or standard of care), result of what is written in the clinical practice guidelines, credentialling of staff required, clinical staff initial and ongoing training required, and the effect on existing technology in the department or on other services/departments.
Defining Terms
Appropriate technology [1]: A term used initially in developing countries, referring to selecting medical equipment that can “appropriately” satisfy the following constraints:
funding shortages, insufficient numbers of trained personnel, lack of technical support, inadequate supplies of consumables/ accessories, unreliable water an power utilities/supplies, and lack of operating and maintenance manuals. In the context of this chapter, appropriate technology selection must taken into consideration local health needs and disease prevalence, the need for local capability of equipment maintenance, and availability of resources for ongoing operational and technical support.
Clinical engineers/biomedical engineers: As we began describing the issues with the management of medical technology, it became obvious that some of the terms are being used interchangeably in the literature. For example, the terms engineers, clinical engineers, biomedical equipment technicians, equipment managers, and health care engineers are frequently used. For clarification, in this chapter we will refer to clinical engineers and the clinical engineering department as a representative group for all these terms.
Cost effectiveness [1]: A mixture of quantitative and qualitative considerations. It includes the health priorities of the country or region at the macro-assessment level and the community needs at the institution micro-assessment level. Product life-cycle cost analysis (which, in turn, includes initial purchase price, shipping, renovations, installation, supplies, associated disposables, cost per use, and similar quantitative measures) is a critical analysis measure. Life-cycle cost also takes into account staff training, ease of use, service, and many other cost factors. But experience and judgment about the relative importance of features and the ability to fulfill the intended purpose also contribute critical information to the cost-effectiveness equation.
Equipment acquisition and deployment: Medical device systems and products typically emerge from the strategic technology planning process as “required and budgeted” needs. The process that follows, which ends with equipment acceptance testing and placement into general use, is known as the equipment acquisition and deployment process.
Health care technology: Health care technology includes the devices, equipment, systems, software, supplies, pharmaceuticals, biotechnologies, and medical and surgical procedures used in the prevention, diagnosis, and treatment of disease in humans, for their rehabilitation, and for assistive purposes. In short, technology is broadly defined as encompassing virtually all the human interventions intended to cope with disease and disabilities, short of spiritual alternatives. This chapter focuses on medical equipment products (devices, systems, and software) rather than pharmaceuticals, biotechnologies, or procedures [1]. The concept of technology also encompasses the facilities that house both patients and products. Facilities cover a wide spectrum—from the modern hospital on one end to the mobile imaging trailer on the other.
Quality of care (QA) and quality of improvement (QI): Quality assurance (QA) and Quality improvement (QI) are formal sets of activities to measure the quality of care provided; these usually include a process for selecting, monitoring, and applying corrective measures. The 1994 Joint Commission on the Accreditation of Healthcare Organizations (JCAHO) standards require hospital QA, programs to focus on patient outcomes as a primary reference. JCAHO standards for plant, technology, and safety
management (PTSM), in turn, require certain equipment management practices and QA or QI activities. Identified QI deficiencies may influence equipment planning, and QI audits may increase awareness of technology overuse or under utilization.
Risk management: Risk management is a program that helps the hospital avoid the possibility of risks, minimize liability exposure, and stay compliant with regulatory reporting requirements. JCAHO PTSM standards require minimum technology-based risk-management activities. These include clinical engineering’s determination of technology-related incidents with follow-up steps to prevent recurrences and evaluation and documentation of the effectiveness of these steps.
Safety: Safety is the condition of being safe from danger, injury, or damage. It is judgment about the acceptability of risk in a specified situation (e.g., for a given medical problem) by a provider with specified training at a specified type of facility equipment.
Standards [1]: A wide variety of formal standards and guidelines related to health care technology now exists. Some standards apply to design, development, and manufacturing practices for devices, software, and pharmaceuticals; some are related to the construction and operation of a health care facility; some are safety and performance requirements for certain classes of technologies, such as standards related to radiation or electrical safety;
and others relate to performance, or even construction specifications, for specific types of technologies. Other standards and guidelines deal with administrative, medical, and surgical procedures and the training of clinical personnel. Standards and guidelines are produced and/or adopted by government agencies, international organizations, and professional and specialty organizations and societies. ECRI’s Healthcare Standards Directory lists over 20,000 individual standards and guidelines produced by over 600 organizations and agencies from North America alone.
Strategic technology planning: Strategic technology planning encompasses both technologies new to the hospital and replacements for existing equipment that are to be acquired over several quarters. Acquisitions can be proposed for reasons related to safety, standard-of-care issues, and age or obsolescence of existing equipment. Acquisitions also can be proposed to consolidate several service areas, expand a service areas to reduce cost of service, or add a new service area.
Strategic technology panning optimizes the way the hospital’s capital resources contribute to its mission. It encourages choosing new technologies that are cost-effective, and it also allows the hospital to be competitive in offering state-of-the-art services.
Strategic technology planning works for a single department, product line, or clinical service. It can be limited to one or several high-priority areas. It also can be used for an entire mulihospital system or geographic region [4].
Technology assessment: Assessment of medical technology is any process used for examining and reporting properties of medical technology used in health care, such as safety, efficacy, feasibility, and indications for use, cost, and cost effectiveness, as well as social, economic, and ethical consequences, whether intended or unintended [2]. A primary technology assessment is one that seeks new, previously nonexistent data through research, typically employing long-term clinical studies of the type described below. A secondary technology assessment is usually based on published data, interviews, questionnaires, and other information-gathering methods rather than original research that creates new, basic data.
In technology assessment, there are six basic objectives that the clinical engineering department should have in mind. First, there should be ongoing monitoring of developments concerning new and emerging technologies. For new technologies, there should be an assessment of the clinical efficacy, safety, and cost/benefit ratio, including their effects on established technologies. There should be an evaluation of the short- and long-term costs and benefits of alternate approaches to managing specific clinical conditions. The appropriateness of existing technologies and their clinical uses should be estimated, while outmoded technologies should be identified and eliminated from their duplicative uses. The department should rate specific technology-based interventions in terms of improved overall value (quality and outcomes) to patients, providers, and payers. Finally, the department should facilitate a continuous uniformity between needs, offerings, and capabilities [3],
The locally based (hospital or hospital group) technology assessment described in this chapter is a process of secondary assessment that attempts to judge whether a certain medical equipment/ product can be assimilated into the local operational environment.
Technology diffusion [1]: The process by which a technology is spread over time in a social system. The progression of technology diffusion can be described in four stages.
The emerging or applied research stage occurs around the time of initial clinical testing.
In the new stage, the technology has passed the phase of clinical trials but is not yet in widespread use. During the established stage, the technology is considered by providers to be a standard approach to a particular condition and diffuses into general use. Finally, in the obsolete/outmoded stage, the technology is superseded by another and/or is demonstrated to be ineffective or harmful.
Technology life cycle: Technology has a life cycle—a process by which technology is crated, tested, applied, and replaced or abandoned. Since the life cycle varies from basic research and innovation to obsolescence and abatement, it is critical to know the maturity of a technology prior to making decisions regarding its adoption. Technology forecast assessment of pending technological changes are the investigative tools that support systematic and rational decisions about the utilization of a given institution’s technological capabilities.
Technology planning and management [3]: Technology planning and management are an accountable, systematic approach to ensuring that cost-effective, efficacious, appropriate, and safe equipment is available to meet the demands of quality patient care and allow an institution to remain competitive. Elements include in-house service management, management and analysis of equipment external service providers, involvement in the equipment acquisition process, involvement of appropriate hospital personnel in facility planning and design, involvement in reducing technol-ogy-related patient and staff incidents, training equipment users, reviewing equipment replacement needs, and ongoing assessment of emerging technologies [4].
References
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